To receive any questions from members of the public and replies thereto.
Minutes:
The following questions were asked by members of the public:
Paul Elstone
My Questions relate to Agenda Item 8 Grant Thornton Interim Audit Findings for 2022/2023:
Question 1
Page 5 of the Report - Headlines - says the following. As set out in the Value for Money section of this report the Council have made loans to its subsidiary company i.e. 3 Rivers, totalling circa £23 million.
This loan figure is higher than previously stated. Therefore, what is the exact amount of the 3 Rivers loan today?
Answer
£22.171m
Question 2
The report also says that the Council has previously recognised impairments of around £5.3 million. That its assessment in November 2023 for a further impairment of £3.7 million.
Therefore, a total impairment or write off or loss to this Council of £9 million. This as a result of its lending to 3 Rivers.
For full clarity can it be confirmed that the £9 million is the actual amount of impairment sitting on MDDC’s accounts today, this as the figure seems to be rapidly escalating ?
Answer
No, the impairments to date are the c£5.3m, the c£3.7m are the likely further impairments incurred in soft closing the company. These are still estimates based on a number of commercial variables.
Question 3
Reference to Agenda item 6, Corporate Risk Register CR9a – Reputational Risk of 3 Rivers.
Despite this administration saying they will not apportion any blame in their investigation into 3Rivers, it seems officers are willing to blame the general public for asking questions even threatening criminal action. The general public are justifiably very concerned because they can see that £9m is being written off.
Amongst other things they are aware of, the S151 Officer said as early as 2019 and I quote ‘We have taken on the St George’s Court Scheme, there was obviously no profit in it. If 3Rivers had been offered it on a commercial basis, it would not have taken it’.
This was after he had recommended to Members that 3Rivers build this development. Also at the Cabinet meeting taking decisions involving 3Rivers the Cabinet Member for Finance asked the Chair of Scrutiny to withdraw a comment about ‘cooking the books’ which they declined to do.
My question is directed at Grant Thornton on this or even Bishop Fleming. Will the external auditors examine each of these points made?
Answer
In terms of the work that we are looking at as part of the audit, all audit years relating to 2021/22 and prior have already been completed, conducted and closed and in reference to our previous external auditors reports you will see, certainly in terms of the Value For Money findings, areas where we have identified a number of recommendations over a number of those early years of the company. I would draw your attention to those previous audit reports and those findings.
I can only comment about the audit year that is still open and has yet to be certified as you’ll see from the update report that we have today the audit work is still very much in progress as is our Value For Money work in relation to not only 3Rivers but also wider governance and financial considerations to the Council so please be assured that we are looking at this area as part of the risk assessment that we set out in our plan earlier this year but I cannot comment anymore until that audit work has been concluded. (Julie Masci, Grant Thornton).
Nick Quinn
Regarding Agenda Item 8 – Grant Thornton Interim Audit Findings 2022/23
On page 3 of the Grant Thornton Interim Audit Findings in the third paragraph, mention is made of the Council decision on 6 September to ‘soft close’ 3 Rivers.
At a meeting arranged by Grant Thornton, three weeks after this decision, it was clear that “no arrangements had been made to reconsider the accounts of the
Company at that time”.
It is also stated in the following paragraph that “the Council has yet to agree with 3 Rivers a clear timeline for the Company’s closure or set out clear action plans to manage its exit strategy”.
It is also stated elsewhere in the report that the 2022/23 Audit has been paused.
My questions are:
Q1. Has Audit Committee received assurances that arrangements for the reconsideration of the 3 Rivers Accounts have now been put in place?
Answer
I am not quite sure what the ‘reconsideration’ is referring to? At the end of the day 3Rivers will have their accounts verified by an external auditor. That process has been suspended and the company have asked their external auditors for a delay in completing their accounts which I believe has been agreed. Obviously in order for Grant Thornton to complete their 22/23 audit of ‘the Council’ it needs to see completed accounts from 3Rivers however as I have said those accounts are delayed because there are a number of material transactions such as asset disposals that are ongoing at the moment and until those are clarified it’s very difficult for 3Rivers auditors to give a view on the accounts. So there is no ‘reconsideration’, there will be a ‘consideration’ of their accounts for the 22/23 final year. Once that’s been concluded we will then consolidate them in our own 22/23 accounts and bring them in front of you as soon as we practically can. (S151 Officer)
Q2: As the Council’s main Risk oversight Committee, has Audit Committee now been provided with a “clear timeline for the Company’s closure and clear action plans to manage its exit strategy”?
Answer
I have not provided the Audit Committee with a clear timeline because I am following the Cabinet and Council’s instruction to soft close the company as soon as practicable. Clearly senior officers and 3Rivers have had a number of discussions and now have weekly meetings to progress the soft closure. We do have a very clear close down plan which we are aiming for the vast majority of the company’s activities to be closed by the end of this financial year, again clearly that kind of document would be very commercially sensitive therefore it couldn’t be brought before you in a Part I capacity, we could, if you wanted to see it, provide that in a Part II report but at the end of the day I am following the instruction of full Council. I have given reassurance a few months ago now that where we can Cabinet will receive updates on a monthly basis in our budget monitoring reports of how that close down process is going clearly within the gift of Part I and Part II commerciality, so that’s where we are with that at the moment. (S151 Officer).
Note: It was AGREED that the clerk would liaise with the Chairmen of the Scrutiny Committee and Audit Committee as to the most appropriate Committee to bring a Part II report to setting out the close down timetable for 3Rivers.
Q3: Has the 2022/23 Grant Thornton Audit been recommenced?
Answer
A thorough update will be provided to you under the Grant Thornton item later in the meeting.